<PAGE> 1
---------------------------------------------------------------------------
SEMI-ANNUAL REPORT TO SHAREHOLDERS AUGUST 31, 1996
---------------------------------------------------------------------------
[NAVIGATOR MONEY [NAVIGATOR TAX-FREE MONEY
MARKET FUND LOGO] MARKET FUND LOGO]
A member of the A member of the
NAVIGATOR GROUP of FUNDS NAVIGATOR GROUP of FUNDS
---------------------------------------------------------------------------
<PAGE> 2
CHAIRMAN'S LETTER
October 14, 1996
Dear Shareholder:
Events of Importance
- Federal Reserve Policy -- Although Federal Reserve policy-makers have
refrained from raising or lowering interest rates since January, rate
expectations have fluctuated dramatically during 1996. Many economists
predicted that the Central Bank would break a nineteen month streak and
begin raising interest rates, but the Federal Reserve surprised the
financial markets at their September FOMC meeting by continuing to leave
monetary policy unchanged.
- 2A-7 Implementation -- The Securities and Exchange Commission had
issued revised guidelines earlier this year for taxable and tax exempt
money market funds, on which we reported in our last report to you. As
an update, the full implementation has been delayed due to some
technical issues. Again, we anticipate that the impact, if any, on the
Navigator funds will be minimal.
We continue to follow our time-tested philosophy of quality investing.
In this rate environment, some investment managers continue to find it
tempting to reduce investment standards in order to stretch for a few
more basis points of yield. We can assure you that is not the practice
with the Navigator Money Market or Navigator Tax-Free Money Market
Funds.
As you know, Fairfield was built on a tradition of quality, and that
philosophy remains unchanged. We will continue to strive to always
provide our shareholders with very high quality portfolios, while still
delivering industry-competitive yields.
I'd like to thank you once again for your continued confidence in the
Navigator Money Market and Navigator Tax-Free Money Market Funds. Our
commitment of providing a competitive product with minimal risk remains
unchanged.
Sincerely,
/s/ ROBERT J. WALKER, JR.
Robert J. Walker, Jr.
Chairman
1
<PAGE> 3
INVESTMENT REPORT
Economic Overview
- Volatility in the domestic economy offered economists and investors
their choice of strong and not-so strong indicators in the semi-annual
period ended in August. Non-farm payrolls exceeded the markets'
expectations more times than not, personal income and consumption were
as strong, and industrial production was healthy, while not increasing
inflation. Factory orders were up one more time than they were down. The
housing sector, which has been one of the first to slow in the past, has
yet to show any significant signs of weakness despite higher mortgage
rates. Consumer confidence partially reflects this as the trend has been
up for most of the calendar year. Focusing on Gross Domestic Production,
economists continue to anticipate that growth for the year will
approximate 3.0%, with inflation remaining at less than 3.0%. This was
viewed as positive by the Dow Jones Industrial average as it rose 130
points, while the 30-year Treasury Bond showed sensitivity to
inflationary concerns by rising 62 basis points to 7.12%.
Navigator Money Market Fund
Despite the fact that Federal Reserve policy-makers have refrained from
raising or lowering interest rates since January, rate expectations have
fluctuated dramatically during 1996. The Central Bank last changed
monetary policy on January 31, trimming the target federal funds rate 25
basis points to 5.25% when the economy still appeared soft. During the
past six months however, mixed economic news and uncertainty about
future Fed actions have kept the financial markets speculating about the
direction of interest rates.
Expectations of lower rates faded quickly as the U.S. economy grew at a
faster-than-expected pace in the first and second quarters of 1996. Many
economists began to predict that the Central Bank would break a nineteen
month streak and begin raising interest rates. But the Federal Reserve
surprised the financial markets at their September FOMC meeting by
leaving monetary policy unchanged. The Navigator Money Market Fund has
maintained a steady course throughout this period, avoiding dramatic
changes in the composition, the quality or the average maturity of the
portfolio. This investment philosophy has resulted in a highly
competitive yield with a minimal degree of risk.
The Fund's objective remains to provide a high-quality investment
portfolio which offers a yield competitive with that of its peers. All
commercial paper held in the Navigator Money Market portfolio is rated
"A-1+" or "A-1" by Standard & Poor's and "P-1" by Moody's, the highest
commercial paper quality ratings of both rating agencies. The Fund will
continue to diversify by taking advantage of opportunities that
occasionally present themselves in the U.S. Government and Agency
markets.
2
<PAGE> 4
PORTFOLIO STATISTICS
<TABLE>
<CAPTION>
Average Average
Monthly Compound Maturity
Month Yield Yield* (Month-end)
<S> <C> <C> <C> <C>
----------------------------------------------------------------------
1996 March 5.11% 5.23% 33 days
April 5.20 5.33 40
May 5.19 5.32 44
June 5.23 5.35 55
July 5.26 5.39 47
August 5.24 5.37 39
--------------------- ------- ------- --------
Average Annualized
Yields and Maturity 5.20% 5.33% 43 days
======= ======= ========
</TABLE>
*Compound yields assume reinvestment of dividends.
MATURITY DIVERSIFICATION SCHEDULE
AS OF AUGUST 31, 1996
<TABLE>
<CAPTION>
Amount
(Amortized Cost) % of Portfolio % Cumulative
<S> <C> <C> <C>
----------------------------------------------------------------------
One Day $ 22,550,000 16.0% 16.0%
2-7 days 12,297,757 8.7 24.7
8-30 days 21,842,640 15.5 40.2
31-60 days 51,210,387 36.3 76.5
61-90 days 20,786,097 14.7 91.2
Over 90 days 12,321,634 8.8 100.0
------------- ------
Total $ 141,008,515 100.0%
============= ======
</TABLE>
3
<PAGE> 5
INVESTMENT REPORT
Navigator Tax-Free Money Market Fund
- As the Fund's fiscal year began in March, the Advisor was undertaking
a program to extend the weighted average maturity from the 40-day area
to the mid-fifty day area. This targeted maturity was maintained
throughout the month of March, despite an asset decline of almost 10%.
The approach of the April 15 tax date often finds funds shortening
maturities in anticipation of asset declines. However, when the decline
came this year, it was often after the tax date and the magnitude was
larger than anticipated for many participants. The advisor sold selected
longer-dated securities to offset this outflow. The Fund's yield
meanwhile continued to be susceptible to the usual technical pressures;
yields fell early in each month, then increased as the cash flows were
re-allocated across the yield curve. On the whole, the Fund's yields
headed higher through the middle of May. At that time, the uncertainty
over the direction of taxable interest rates was compounded by the
prospect of a declining supply in tax exempt securities, reversing the
rising trend of the Fund's yield.
Typically, the early days in July are a challenge for portfolio managers
because July 1 is the second largest coupon payment date of the year,
and because of the shortened work week that results from the July 4th
holiday. The result was an industry-wide increase in assets that
coincided with plummeting yields. With the increase in assets, some
extension was undertaken in an effort to diversify maturities and fully
invest the portfolio. By the time the asset level stabilized in
mid-July, the Fund's weighted average maturity had extended to the
mid-60 day area.
The Fund's yield has been volatile over the last six months. This is
largely attributable to the strength (or lack thereof) in the domestic
economy and the possibility and/or timing of a tightening of monetary
policy by the Federal Reserve. Looking to the upcoming quarter, more of
the same is expected; an economy that shows sporadic signs of strength,
only to be immediately followed by signs of weakness. Inflation
continues to hover in the same 2-3% area that it has been for the last
five years. The possibility of one change in monetary policy is likely
over the coming months; however, more than one move does not appear
likely at this time. An interesting twist may come from portfolios
outside the money market sector as portfolio managers lock-in their
profits, reducing their exposure to their respective markets and placing
the proceeds in the money market sector. While this defensive action
could dampen any price deterioration that might result from any actions
by the Fed, the cash markets could experience artificially low rates
until early 1997.
On the regulatory front, the SEC updated rule 2a-7 in 1991. These
guidelines were largely directed to taxable money market funds. Earlier
this year, the SEC issued a similar update for the tax-exempt money
market funds. While the implementation date has been delayed due to some
technical issues, these actions should serve to level the playing field
for the tax-exempt money market fund industry. At this time, the Fund's
advisor anticipates that the impact to the Navigator Funds will be
minimal.
4
<PAGE> 6
PORTFOLIO STATISTICS
<TABLE>
<CAPTION>
Average Average
Monthly Compound Maturity
Month Yield Yield* (Month-end)
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
1996 March 3.03% 3.07% 64 days
April 3.15 3.19 28
May 3.24 3.29 32
June 3.02 3.06 31
July 2.87 2.91 57
August 3.10 3.15 52
--------------------- ------ ------ --------
Average Annualized
Yields and Maturity 3.07% 3.11% 44 days
====== ====== ========
</TABLE>
*Compound yields assume reinvestment of dividends.
PORTFOLIO COMPOSITION
AS OF AUGUST 31, 1996
<TABLE>
<CAPTION>
Amount
(Face Value) % of Portfolio
<S> <C> <C>
-----------------------------------------------------------------------
Floating Rate Securities:
Daily Liquidity $ 6,400,000 10.4%
7-Day Liquidity 28,050,000 45.4
Notes and Bonds 8,043,629 13.0
Tax-Exempt Commercial Paper 14,400,000 23.2
Put Bonds 4,971,319 8.0
----------- ------------
$61,864,948 100.0%
=========== ============
</TABLE>
PORTFOLIO QUALITY
AS OF AUGUST 31, 1996
<TABLE>
<CAPTION>
Moody's Ratings % of Portfolio
<S> <C> <C>
--------------------------------------------------------------------------------------------
"MIG-1/VMIG-1" Highest Quality Short-term Instruments 41.7%
"Prime-1" Highest Quality
Tax-Exempt Commercial Paper 58.3
------------
100.0%
============
</TABLE>
5
<PAGE> 7
FINANCIAL STATEMENTS
Statement of Net Assets
Navigator Money Market Fund
August 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
MATURITY INTEREST
PAR SECURITY DATE RATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- 66.55%
AUTOMOBILE MANUFACTURER -- 4.96%
$ 4,000,000 Ford Motor Credit Corporation.................. 09/30/96 5.29% $ 3,982,954
3,000,000 Ford Motor Credit Corporation.................. 10/23/96 5.42% 2,976,513
-------------
TOTAL AUTOMOBILE MANUFACTURER.......................................... 6,959,467
--------------------------------------------------------------------------------------------------------
CONGLOMERATE -- 4.97%
4,000,000 General Electric Capital....................... 09/25/96 5.35% 3,985,733
3,000,000 General Electric Capital....................... 10/23/96 5.30% 2,977,033
-------------
TOTAL CONGLOMERATE..................................................... 6,962,766
--------------------------------------------------------------------------------------------------------
CONSUMER ELECTRONICS -- 4.95%
5,000,000 Sharp Electronics.............................. 10/11/96 5.42% 4,969,889
2,000,000 Sharp Electronics.............................. 12/13/96 5.31% 1,969,615
-------------
TOTAL CONSUMER ELECTRONICS............................................. 6,939,504
--------------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES -- 5.59%
1,900,000 Hasbro, Inc. .................................. 09/20/96 5.38% 1,894,605
1,000,000 Hasbro, Inc.................................... 10/04/96 5.40% 995,050
2,500,000 Hasbro, Inc.................................... 10/11/96 5.35% 2,485,139
1,000,000 Hasbro, Inc.................................... 11/20/96 5.45% 987,889
1,500,000 Hasbro, Inc.................................... 12/18/96 5.48% 1,475,340
-------------
TOTAL CONSUMER NON-DURABLES............................................ 7,838,023
--------------------------------------------------------------------------------------------------------
FINANCE, CORPORATE RECEIVABLES -- 14.91%
3,000,000 Asset Securitization Cooperative............... 10/01/96 5.40% 2,986,500
4,000,000 Asset Securitization Cooperative............... 10/21/96 5.42% 3,969,889
4,000,000 Corporate Asset Funding........................ 09/11/96 5.26% 3,994,156
3,000,000 Corporate Asset Funding........................ 10/22/96 5.40% 2,977,050
4,000,000 Preferred Receivables Funding Corp. ........... 09/04/96 5.30% 3,998,233
3,000,000 Preferred Receivables Funding Corp. ........... 09/25/96 5.38% 2,989,240
-------------
TOTAL FINANCE, CORPORATE RECEIVABLES................................... 20,915,068
--------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES, DIVERSIFIED -- 8.52%
5,000,000 Associates Corp. of North America.............. 10/01/96 5.27% 4,978,042
3,000,000 John Deere Capital Corp. ...................... 09/24/96 5.24% 2,989,957
4,000,000 John Deere Capital Corp. ...................... 09/26/96 5.24% 3,985,445
-------------
TOTAL FINANCIAL SERVICES, DIVERSIFIED.................................. 11,953,444
--------------------------------------------------------------------------------------------------------
FOREST PRODUCTS -- 3.55%
5,000,000 Weyerhaeuser Company........................... 10/10/96 5.27% 4,971,454
-------------
TOTAL FOREST PRODUCTS.................................................. 4,971,454
--------------------------------------------------------------------------------------------------------
INSURANCE, FULL-LINE -- 4.26%
4,000,000 Prudential Funding............................. 10/09/96 5.36% 3,977,369
2,000,000 Prudential Funding............................. 10/11/96 5.36% 1,988,089
-------------
TOTAL INSURANCE, FULL-LINE............................................. 5,965,458
--------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT -- 4.93%
3,000,000 Xerox Corporation.............................. 11/12/96 5.30% 2,968,200
4,000,000 Xerox Corporation.............................. 12/05/96 5.32% 3,943,844
-------------
TOTAL OFFICE EQUIPMENT................................................. 6,912,044
--------------------------------------------------------------------------------------------------------
POLLUTION CONTROL -- 4.96%
5,000,000 WMX Technologies............................... 10/08/96 5.23% 4,973,123
2,000,000 WMX Technologies............................... 10/15/96 5.31% 1,987,020
-------------
TOTAL POLLUTION CONTROL................................................ 6,960,143
--------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
MATURITY INTEREST
PAR SECURITY DATE RATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
SECURITIES DEALERS -- 4.95%
$ 5,000,000 Goldman Sachs Group L.P.......................... 11/06/96 5.37% 4,950,775
2,000,000 Merrill Lynch.................................... 09/11/96 5.30% 1,997,056
-----------
TOTAL SECURITIES DEALERS................................................. 6,947,831
--------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER................................................... 93,325,202
--------------------------------------------------------------------------------------------------------
MEDIUM TERM NOTES, VARIABLE -- 7.13%
5,000,000 Bear Stearns Companies, Inc.
Floating Rate Note............................. 09/03/96 5.43%* 5,000,000
5,000,000 Merrill Lynch & Co., Inc.
Floating Rate Note............................. 09/03/96 5.40%* 5,000,000
--------------------------------------------------------------------------------------------------------
TOTAL MEDIUM TERM NOTES, VARIABLE........................................ 10,000,000
--------------------------------------------------------------------------------------------------------
U.S. AGENCIES -- 17.82%
5,000,000 Federal Farm Credit Bank Discount Notes.......... 11/06/96 5.21% 4,952,242
5,000,000 Federal Farm Credit Bank Discount Notes.......... 11/21/96 5.36% 4,939,700
2,000,000 Federal Farm Credit Bank Discount Notes.......... 12/04/96 5.39% 1,971,878
2,000,000 Federal Home Loan Bank........................... 09/03/96 4.32%* 1,999,601
1,200,000 Student Loan Marketing Association............... 09/03/96 4.32%* 1,199,832
5,000,000 Federal Home Loan Bank Discount Notes............ 09/06/96 5.10% 4,996,458
3,000,000 Federal Home Loan Bank Discount Notes............ 12/09/96 5.18% 2,957,265
2,000,000 Federal National Mortgage Association
Discount Notes................................. 11/05/96 5.24% 1,981,096
--------------------------------------------------------------------------------------------------------
TOTAL U.S. AGENCIES...................................................... 24,998,072
--------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 9.02%
11,000 First Boston Variable
dated 08/26/96, due 09/03/96
(collateralized by
U.S. Treasury Bonds;
market value $11,176).......................... 09/03/96 5.00% 11,000
80,000 Goldman Sachs Variable
dated 08/26/96, due 09/03/96
(collateralized by
U.S. Treasury Bonds;
market value $82,387).......................... 09/03/96 5.10% 80,000
10,000 Merrill Lynch Variable
dated 08/26/96, due 09/03/96
(collateralized by
U.S. Treasury Bonds;
market value $10,225).......................... 09/03/96 5.05% 10,000
</TABLE>
7
<PAGE> 9
Statement of Net Assets (Cont.)
<TABLE>
<CAPTION>
MATURITY INTEREST
PAR SECURITY DATE RATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
$ 12,550,000 Paine Webber Tri-Party
dated 08/30/96, due 09/03/96
(collateralized by
U.S. Government Agency-issued,
Mortgage-backed Securities;
market value $12,892,160)..................... 09/03/96 5.30% 12,550,000
--------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS............................................. 12,651,000
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
TOTAL VALUE OF SECURITIES OWNED -- 100.52%
(which approximates cost for federal income tax purposes)............. 140,974,274
LESS LIABILITIES REDUCED BY OTHER ASSETS -- (0.52%)..................... (733,503)
------------
NET ASSETS APPLICABLE TO 140,243,411 SHARES OUTSTANDING;
EQUIVALENT TO $1.00 PER SHARE -- 100.00%.............................. $140,240,771
============
</TABLE>
-------------------------------------
* = The interest rate shown for each
of these obligations is the rate
as of August 31, 1996 and the
maturity shown is the date of the
next interest rate adjustment.
See accompanying notes.
8
<PAGE> 10
FINANCIAL STATEMENTS
Statement of Net Assets
Navigator Tax-Free Money Market Fund
August 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
MATURITY INTEREST
PAR SECURITY DATE RATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
COLORADO -- 8.54%
$ 3,000,000 Colorado St. General Fund Rev. TRAN Ser A........ 06/27/97 4.50% $ 3,017,766
2,300,000 Moffat County, PCR Rfdg. Bonds (Colorado UTE
Electric Assn. Inc. Proj.), VRDO............... 09/04/96 3.55% 2,300,000
-----------
TOTAL COLORADO........................................................... 5,317,766
--------------------------------------------------------------------------------------------------------
FLORIDA -- 3.85%
2,400,000 Broward County, HFA, MFHR Bonds (Landings of
Inverrary), VRDO............................... 09/05/96 3.55% 2,400,000
-----------
TOTAL FLORIDA............................................................ 2,400,000
--------------------------------------------------------------------------------------------------------
INDIANA -- 11.88%
4,100,000 Gary, Environmental Improvement Rev. Rfdg
Bonds (USX), VRDO.............................. 09/13/96 3.70% 4,100,000
3,300,000 Mt. Vernon, Pollution Control and Solid Waste
Disposal Rev. Rfdg Bonds (GE), Series A CP..... 10/15/96 3.55% 3,300,000
-----------
TOTAL INDIANA............................................................ 7,400,000
--------------------------------------------------------------------------------------------------------
IOWA -- 1.45%
900,000 Waterloo, IDR Bonds (Waterloo Civic Center
Hotel), VRDO................................... 09/03/96 3.80% 900,000
-----------
TOTAL IOWA............................................................... 900,000
--------------------------------------------------------------------------------------------------------
LOUISIANA -- 5.46%
3,400,000 Louisiana Recovery District Sales Tax Bonds,
VRDO........................................... 09/03/96 3.85% 3,400,000
-----------
TOTAL LOUISIANA.......................................................... 3,400,000
--------------------------------------------------------------------------------------------------------
MASSACHUSETTS -- 13.76%
4,975,000 Massachusetts Bay Transportation Auth. Gen.
Transportation System 1984A Put................ 09/01/96 3.05% 4,971,319
2,000,000 Massachusetts Health & Educational Fac. Auth.
Rev. Bonds (Harvard University), Series L CP... 09/24/96 3.30% 2,000,000
1,600,000 Massachusetts Industrial Fin. Agency PCR Rfdg.
Bonds (New England Power Co.), Series B, CP.... 10/23/96 3.45% 1,600,000
-----------
TOTAL MASSACHUSETTS...................................................... 8,571,319
--------------------------------------------------------------------------------------------------------
PENNSYLVANIA -- 21.72%
2,000,000 Beaver County, IDA PCR Rfdg. Bonds (Duquesne
Light), Series B VRDO.......................... 09/04/96 3.45% 2,000,000
3,000,000 City of Philadelphia, TRAN Ser A................. 06/30/97 4.50% 3,013,114
1,800,000 Delaware County, IDA Solid Waste Rev. Bonds
(Kimberly-Clark), Series D VRDO................ 09/04/96 3.40% 1,800,000
1,700,000 Lackawanna County, IDA IDR Bonds (National Book
Company Inc.), VRDO............................ 09/04/96 4.13% 1,700,000
3,000,000 Montgomery County, IDA PCR Rfdg. Bonds (PECO),
Series A, CP................................... 10/02/96 3.45% 3,000,000
2,000,000 Temple University of the Commonwealth System of
Higher Educational University Funding
Obligation..................................... 05/20/97 4.63% 2,012,749
-----------
TOTAL PENNSYLVANIA....................................................... 13,525,863
--------------------------------------------------------------------------------------------------------
SOUTH DAKOTA -- 4.82%
3,000,000 Lawrence County, PCR Bonds (Homestake Mining),
VRDO........................................... 09/04/96 3.30% 3,000,000
-----------
TOTAL SOUTH DAKOTA....................................................... 3,000,000
--------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 11
Statement of Net Assets (Cont.)
<TABLE>
<CAPTION>
MATURITY INTEREST
PAR SECURITY DATE RATE VALUE
<C> <S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
TENNESSEE -- 1.61%
$ 1,000,000 Memphis, GO Bonds Series A, VRDO................. 09/04/96 3.45% 1,000,000
-----------
TOTAL TENNESSEE.......................................................... 1,000,000
--------------------------------------------------------------------------------------------------------
TEXAS -- 17.99%
2,200,000 Brazos River Auth, Variable Rate Demand PCR Rfdg.
Bonds (Monsanto Co), VRDO...................... 09/04/96 3.50% 2,200,000
3,000,000 Harris County, HFDC Rev Bonds for Methodist Hosp
VRDO........................................... 09/03/96 3.75% 3,000,000
3,500,000 Harris County, HFDC Rev Bonds For Sisters of
Charity CP..................................... 10/15/96 3.50% 3,500,000
1,000,000 Houston, GO CP Series B CP....................... 11/13/96 3.40% 1,000,000
1,500,000 Port of Corpus Christi Auth. of Nueces County,
Marine Term Rev. Bonds (Reynolds Metals),
VRDO........................................... 09/04/96 3.30% 1,500,000
-----------
TOTAL TEXAS.............................................................. 11,200,000
--------------------------------------------------------------------------------------------------------
VIRGINIA -- 4.66%
2,900,000 Roanoke, IDA Hospital Rev. Bonds (Carilion Health
System/Roanoke Hospital), Series C, VRDO....... 09/05/96 3.45% 2,900,000
-----------
TOTAL VIRGINIA........................................................... 2,900,000
--------------------------------------------------------------------------------------------------------
WASHINGTON -- 3.61%
2,250,000 Washington HFC MFMR Rfdg. Bonds Series B, VRDO... 09/04/96 3.65% 2,250,000
-----------
TOTAL WASHINGTON......................................................... 2,250,000
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
TOTAL VALUE OF SECURITIES OWNED -- 99.35%
(which approximates cost for income tax purposes)...................... 61,864,948
PLUS ASSETS REDUCED BY OTHER LIABILITIES -- 0.65%........................ 404,910
-----------
NET ASSETS APPLICABLE TO 62,315,298 SHARES OUTSTANDING;
EQUIVALENT TO $1.00 PER SHARE -- 100.00%............................... $62,269,858
===========
</TABLE>
-------------------------------------
CP = Commercial Paper
GO = General Obligation
HFA = Housing Finance Agency/Authority
HFC = Housing Finance
Commission/Corporation
HFDC = Health Facility Development
Corporation
IDA = Industrial Development Authority
IDR = Industrial Development Revenue
MFHR = Multi-Family Housing Revenue
MFMR = Multi-Family Mortgage Revenue
PCR = Pollution Control Revenue
TRAN = Tax and Revenue Anticipation Notes
VRDO = Variable Rate Demand Obligations --
The rate shown for each of these
obligations is the rate as of
August 31, 1996 and the maturity
shown is the date of the next
interest rate adjustment.
See accompanying notes.
10
<PAGE> 12
Statement of Operations
Navigator Funds
For the Six-Month Period Ended August 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
MONEY TAX-FREE
MARKET MONEY
FUND MARKET
---------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Interest.................................................... $4,471,235 $1,326,529
---------- ----------
EXPENSES:
Investment Advisory Fees.................................... 164,869 96,341
Administrative Fees......................................... 82,435 38,536
Less Investment Advisory & Administration Fees
Waived by Management..................................... (218,074) (80,285)
Custodian and Transfer Agent Fees........................... 56,635 34,408
Professional Fees........................................... 16,601 9,936
Taxes -- Other than Income.................................. 16,145 13,800
Registration and Filing Fees................................ 8,220 4,048
Insurance................................................... 4,940 3,128
Miscellaneous............................................... 15,508 16,745
---------- ----------
Total Expenses........................................... 147,279 136,657
---------- ----------
NET INVESTMENT INCOME......................................... 4,323,956 1,189,872
Net Realized Gain (Loss) on Securities Sold................. (411) (18,209)
---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... $4,323,545 $1,171,663
========== ==========
</TABLE>
See accompanying notes.
11
<PAGE> 13
Statements of Changes in Net Assets
Navigator Money Market Fund
For the Six-Month Period Ended August 31, 1996
and for the Nine-Month Period Ended February 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
3/01/96 6/01/95
TO 8/31/96 TO 2/29/96
------------- -------------
<S> <C> <C>
OPERATIONS:
Net Investment Income................................ $ 4,323,956 $ 8,004,650
Net Realized Gain (Loss) on Securities Sold.......... (411) --
------------- -------------
Net Increase in Net Assets
Resulting from Operations......................... 4,323,545 8,004,650
------------- -------------
DIVIDENDS DISTRIBUTED FROM:
Net Investment Income................................ (4,323,956) (8,004,650)
Net Realized Gain (Loss)............................. -- --
------------- -------------
Total Dividends Distributed.......................... (4,323,956) (8,004,650)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold............................ 319,614,862 539,968,847
Net Asset Value of Shares Issued
Upon Reinvestment of Dividends.................... 251,652 151,635
Cost of Shares Repurchased........................... (347,357,657) (610,497,023)
------------- -------------
Net Decrease in Net Assets Derived
from Capital Share Transactions................... (27,491,143) (70,376,541)
------------- -------------
NET DECREASE IN NET ASSETS........................ (27,491,554) (70,376,541)
NET ASSETS:
Beginning of Period.................................. 167,732,325 238,108,866
------------- -------------
End of Period........................................ $ 140,240,771 $ 167,732,325
============= =============
</TABLE>
See accompanying notes.
12
<PAGE> 14
Statements of Changes in Net Assets
Navigator Tax-Free Money Market Fund
For the Six-Month Period Ended August 31, 1996
and For the Year Ended February 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
3/01/96 3/01/95
TO 8/31/96 TO 2/29/96
------------- -------------
<S> <C> <C>
OPERATIONS:
Net Investment Income................................ $ 1,189,872 $ 3,553,900
Net Realized Gain (Loss) on Securities Sold.......... (18,209) 2,352
------------- -------------
Net Increase in Net Assets
Resulting from Operations......................... 1,171,663 3,556,252
------------- -------------
DIVIDENDS DISTRIBUTED FROM:
Net Investment Income................................ (1,189,872) (3,553,900)
Net Realized Gain (Loss)............................. -- --
------------- -------------
Total Dividends Distributed.......................... (1,189,872) (3,553,900)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold............................ 168,257,882 341,728,593
Net Asset Value of Shares Issued
Upon Reinvestment of Dividends.................... 58,048 183,353
Cost of Shares Repurchased........................... (200,843,294) (354,456,269)
------------- -------------
Net Decrease in Net Assets
Derived from Capital Share Transactions........... (32,527,364) (12,544,323)
------------- -------------
NET DECREASE IN NET ASSETS........................ (32,545,573) (12,541,971)
NET ASSETS:
Beginning of Period.................................. 94,815,431 107,357,402
------------- -------------
End of Period........................................ $ 62,269,858 $ 94,815,431
============= =============
</TABLE>
See accompanying notes.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
NOTE 1 -- ORGANIZATION
Navigator Money Market Fund -- Prime Obligations Portfolio ("Prime
Obligations") is a portfolio offered by Navigator Money Market Fund, Inc.
and Navigator Tax-Free Money Market Fund ("Tax-Free Money Market") is a
portfolio offered by Navigator Tax-Free Money Market Fund, Inc. (each
separately referred to as a "Fund" and collectively referred to as the
"Funds"). Navigator Money Market Fund, Inc. and Navigator Tax-Free Money
Market Fund, Inc. (each separately referred to as the "Company" and
collectively referred to as the "Companies"), are no-load, diversified,
open-end investment companies registered under the Investment Company Act
of 1940, as amended.
Shares of each Fund ("Shares") are sold by Fairfield Group, Inc.
("Fairfield") to institutional investors ("Institutions") for the
investment of their own funds or funds for which they act in some
fiduciary capacity ("Customer Accounts"). Fund Shares may not be
purchased by individuals directly, but institutional investors may
purchase Shares for Customer Accounts maintained for individuals.
Fairfield (the "Manager") acts as each Fund's Investment Advisor,
Administrator, and Distributor. Shares are sold and redeemed without any
purchase or redemption charge imposed by the Funds, although Institutions
may charge their Customer Accounts for services provided in connection
with the purchase or redemption of Shares.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Interest income and expenses are recorded on an accrual basis. Interest
income includes, when applicable, the pro rata amortization of premiums
and discounts.
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Investment securities are valued at
amortized cost, which approximates market value. Realized gains and
losses are determined by using the specific identification method. The
net realized capital loss of ($411) by Prime Obligations for the period
ended August 31, 1996 resulted from sales of securities with proceeds and
costs of $10,781,371 and $10,781,782, respectively. The net realized
capital loss of ($18,209) by Tax-Free Money Market for the period ended
August 31, 1996 resulted from sales of securities with proceeds and costs
of $129,248,310 and $129,266,519, respectively.
The fair value of securities for which prices cannot be determined using
established procedures will be valued in good faith by the Board of
Directors. No investments were so valued at August 31, 1996.
Net investment income, determined as gross income less expenses, is
declared as a dividend each day. Declared dividends are distributable to
shareholders monthly on the first business day of the next month.
Dividends payable at August 31, 1996 amounted to $677,718 and $178,091
for Prime Obligations and Tax-Free Money Market Fund, respectively.
No provision for federal income taxes is made since it is the intention
of the Funds to qualify as regulated investment companies under the
provisions of the Internal Revenue Code and to make requisite
distributions to shareholders which will relieve them from Federal income
and excise taxes.
For Federal income tax purposes, net realized capital losses generated in
the Funds may be carried forward and applied against future capital
gains.
NOTE 3 -- INVESTMENT ADVISORY AND ADMINISTRATIVE FEES
As Manager, Fairfield provides investment advisory and administrative
services to the Funds pursuant to Management Agreements dated April 17,
1993. Under the terms of the Agreement for Prime Obligations, the Manager
is entitled to receive an annual fee for investment advisory services of
.20% on the first $500 million of the average net assets of the Fund;
.15% on the next $1 billion; and .10% on average net assets in excess of
$1.5 billion. Under the Agreement for Tax-Free Money Market, the Manager
is entitled to receive an annual fee for investment advisory services of
.25% on the first $1 billion of the average net assets of the Fund; .20%
on the next $1 billion; and .15% on average net assets in excess of $2
billion. Such fees are computed daily and paid monthly.
14
<PAGE> 16
NOTE 3 -- INVESTMENT ADVISORY AND ADMINISTRATIVE FEES (CONT.)
For Prime Obligations, the Manager is also entitled to receive an
administrative fee at the annual rate of .10% on the first $1.5 billion
of the average net assets of the Fund and .05% thereafter. For Tax-Free
Money Market, the Manager is entitled to receive an administrative fee
at the annual rate of .10% on the Fund's average net assets. Such fees
are computed daily and paid monthly.
For Prime Obligations, during the six-month period ended August 31,
1996, the management fees (investment advisory and administrative)
earned by Fairfield totaled $247,304. Of the investment advisory and
administrative fees earned, $218,074 was voluntarily waived by the
Manager in order to assist the Fund in maintaining a competitive expense
ratio. At August 31, 1996, Fairfield was owed $4,106 (after partial fee
waiver) for investment advisory services and $7,440 in administrative
fees.
For Tax-Free Money Market, during the six-month period ended August 31,
1996, the management fees (investment advisory and administrative)
earned by Fairfield totaled $134,877. Of the investment advisory fees
earned, $80,285 was voluntarily waived by the Manager in order to assist
the Fund in maintaining a competitive expense ratio. At August 31, 1996,
Fairfield was owed $2,411 (after partial fee waiver) for investment
advisory services and $2,875 in administrative fees.
NOTE 4 -- CUSTODIAN AND TRANSFER AGENT FEES
Custodial services are provided to the Funds by CoreStates Bank, N.A.
Fund/Plan Services, Inc., is the Fund's Transfer Agent and, as such,
provides transfer agency, dividend disbursing, and bookkeeping services.
NOTE 5 -- OTHER TRANSACTIONS WITH AFFILIATES
Fairfield also serves as the Companies' exclusive Distributor; however,
it receives no fees for providing distribution services.
Certain officers and directors of the Companies are also officers and
directors of Fairfield. Such officers and directors are paid no fees by
the Funds for serving as officers and directors.
The Funds have paid legal fees to a law firm with which the Secretary of
the Companies is associated.
NOTE 6 -- REPURCHASE AGREEMENTS
The investment policies of Prime Obligations permit participation in
repurchase agreements. Collateral for such agreements is held by the
Fund's Custodian in the Federal Reserve's book-entry system. The Fund
monitors its repurchase agreements on a daily basis to ensure that the
market value of the collateral underlying the agreements is maintained
at not less than 100% of the repurchase price.
Prime Obligations may participate in repurchase agreements arranged by
Fairfield for a fee not to exceed 1% of the purchase or sale price of
the transaction. During the period ended August 31, 1996, Fairfield
received $67 in fees with respect to such transactions.
15
<PAGE> 17
NOTE 7 -- CAPITAL SHARES
At August 31, 1996, Prime Obligations had 2 billion shares of $.001 par
value common stock authorized with respect to the Fund. Transactions in
capital shares of the Fund during the periods indicated were as follows:
<TABLE>
<CAPTION>
3/01/96 6/01/95
TO 8/31/96 TO 2/29/96
------------ ------------
<S> <C> <C>
Shares sold............................................... 319,614,862 539,968,847
Shares issued upon reinvestment of dividends.............. 251,652 151,635
Shares repurchased........................................ (347,357,657) (610,497,023)
------------ ------------
Net decrease.............................................. (27,491,143) (70,376,541)
Outstanding at beginning of period........................ 167,734,554 238,111,095
------------ ------------
Outstanding at end of period.............................. 140,243,411 167,734,554
============ ============
</TABLE>
At August 31, 1996, the Tax-Free Fund had 2 billion shares of $.001 par
value common stock authorized with respect to the Fund. Transactions in
capital shares of the Fund during the periods indicated were as follows:
<TABLE>
<CAPTION>
3/01/96 3/01/95
TO 8/31/96 TO 2/28/96
------------ ------------
<S> <C> <C>
Shares sold.............................................. 168,257,882 341,728,593
Shares issued upon reinvestment of dividends............. 58,048 183,353
Shares repurchased....................................... (200,843,294) (354,456,269)
------------ ------------
Net decrease............................................. (32,527,364) (12,544,323)
Outstanding at beginning of period....................... 94,842,661 107,386,984
------------ ------------
Outstanding at end of period............................. 62,315,297 94,842,661
============ ============
</TABLE>
NOTE 8 -- INVESTMENT COMPOSITION
The Tax-Free Fund invests in securities which may include revenue,
general, and escrowed obligations. At August 31, 1996, the revenue
sources by purpose were as follows:
<TABLE>
<CAPTION>
% OF PORTFOLIO
INVESTMENTS
-------------
<S> <C>
Revenue Bonds:
Industrial Development.................................................... 22%
Transportation............................................................ 8
Educational Facilities.................................................... 6
Health Care Facilities.................................................... 10
Housing Facilities........................................................ 8
State Government.......................................................... 5
Chemicals................................................................. 4
Pollution Control......................................................... 16
Basic Metals.............................................................. 7
General Obligations......................................................... 14
-----------
100%
==========
</TABLE>
In addition a certain investment, comprising 5.46% of the portfolio, is
covered by insurance issued by a private insurer. The insurer guarantees
the payment of interest and principal at final maturity in the event of
default. Such insurance, however, does not guarantee the market value of
the securities or the value of the Fund's shares.
16
<PAGE> 18
NOTE 9 -- FINANCIAL HIGHLIGHTS
Financial highlights for a share of Prime Obligations outstanding
throughout the periods indicated were as follows:
<TABLE>
<CAPTION>
3/01/96 6/01/95 6/01/94 6/01/93 6/01/92 6/01/91
TO TO TO TO TO TO
8/31/96 2/29/96 5/31/95 5/31/94 5/31/93 5/31/92
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period............ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- --------
Income from
Investment Operations:
Net Investment Income........ .0262 .0413 .0501 .0314 .0323 .0499
Net Gain (Loss) on Securities
(both realized and
unrealized)................ -- -- -- -- -- .0001
-------- -------- -------- -------- -------- --------
Total Income from
Investment Operations... .0262 .0413 .0501 .0314 .0323 .0500
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net
Investment Income............ (.0262) (.0413) (.0501) (.0314) (.0323) (.0499)
Dividends from
Capital Gains.............. -- -- -- -- -- .0001
-------- -------- -------- -------- -------- --------
Total Distributions..... (.0262) (.0413) (.0501) (.0314) (.0323) (.0500)
-------- -------- -------- -------- -------- --------
Net Asset Value,
end of period.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ======== ========
Total Return..................... 5.33%(a) 5.62%(a) 5.19% 3.18% 3.28% 5.12%
Net Assets,
end of period (000)............ $140,241 $167,132 $238,109 $341,136 $417,114 $443,368
Ratios and Supplemental Data:
Ratio of Expenses to Average
Net Assets................... .18%(a) .25%(a) .28% .27% .26% .22%
Ratio of Expenses to Average
Net Assets, excluding
Fee Waivers.................. .44%(a) .55%(a) .43% .42% .41% .37%
Ratio of Net Investment
Income to Average
Net Assets................... 5.25%(a) 5.51%(a) 5.01% 3.14% 3.23% 4.99%
Ratio of Net Investment
Income to Average Net
Assets, excluding Fee Waivers... 4.99%(a) 5.21%(a) 4.86% 2.99% 3.08% 4.84%
</TABLE>
----------------------
(a) Annualized
17
<PAGE> 19
NOTE 9 -- FINANCIAL HIGHLIGHTS (CONT.)
Financial highlights for a share of the Tax-Free Money Market
outstanding throughout the periods indicated were as follows:
<TABLE>
<CAPTION>
3/01/96 3/01/95 3/01/94 3/01/93 3/01/92 3/01/91
TO TO TO TO TO TO
8/31/96 2/29/96 2/28/95 2/28/94 2/28/93 2/29/92
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period............ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- --------
Income from
Investment Operations:
Net Investment Income........ .0154 .0353 .0286 .0227 .0273 .0407
Net Gain (Loss) on Securities
(both realized and
unrealized)................ (.0002) -- (.0003) -- -- .0001
-------- -------- -------- -------- -------- --------
Total Income from
Investment Operations.. .0152 .0353 .0283 .0227 .0273 .0408
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net
Investment Income.......... (.0154) (.0353) (.0286) (.0227) (.0273) (.0407)
-------- -------- -------- -------- -------- --------
Total Distributions..... (.0154) (.0353) (.0286) (.0227) (.0273) (.0407)
-------- -------- -------- -------- -------- --------
Net Asset Value,
end of period.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ======== ========
Total Return..................... 3.11%(a) 3.59% 2.94% 2.29% 2.76% 4.15%
Net Assets,
end of period (000)............ $ 62,270 $ 94,815 $107,357 $152,273 $202,245 $227,249
Ratios and Supplemental Data:
Ratio of Expenses to Average
Net Assets................... .35%(a) .31% .29% .28% .23% .23%
Ratio of Expenses to Average
Net Assets, excluding
Fee Waivers.................. .56%(a) .51% .49% .48% .43% .45%
Ratio of Net Investment
Income to Average
Net Assets................... 3.09%(a) 3.53% 2.86% 2.27% 2.73% 4.07%
Ratio of Net Investment
Income to Average Net
Assets, excluding
Fee Waivers...................... 2.88%(a) 3.33% 2.66% 2.07% 2.53% 3.85%
</TABLE>
----------------------
(a) Annualized
18
<PAGE> 20
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<PAGE> 21
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<PAGE> 22
INVESTMENT ADVISER,
ADMINISTRATOR,
AND DISTRIBUTOR
Fairfield Group, Inc.
Horsham, PA 19044
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
Philadelphia, PA 19103
AUDITORS
Ernst & Young LLP
Philadelphia, PA 19103
DIRECTORS
Robert J. Walker, Jr.
Richard G. Gilmore
Jan J. Wieckowski
Robert E. Keith
OFFICERS
Robert J. Walker, Jr.,
President
Gerard J. Wills,
Treasurer
James W. Jennings,
Secretary
LOGO LOGO
200 Gibraltar Road
Horsham, PA 19044
1-800-441-3885
